Pasha Project Handbook
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Table of Contents
Table of Contents .............................................................................................. 2
Acronyms ........................................................................................................ 4
Executive Summary ........................................................................................... 6
1.0.
The Pasha Handbook: Scope of Work ............................................................ 9
1.1. Background: An Overview of the ICT Industry in Kenya .................................... 9
1.2. Vision 2030 and ICT ....................................................................................... 12
1.3. KTCIP and Digital Inclusion ............................................................................ 13
2.0.
The Pasha Project Highlights ...................................................................... 15
2.1. Why the Government Supports Pasha Centres ............................................... 15
2.2. The Objectives of Pasha Centres ................................................................... 16
2.3. How ICT Authority Manages the Project ........................................................ 16
2.4. Bandwidth Capacity Support.......................................................................... 17
2.5. Implementation of the Pasha Bandwidth Capacity Support ............................ 17
3.0.
The Pasha Project Story ............................................................................ 18
3.1. Government Funded Digital Villages .............................................................. 19
3.2. The Evolution of the Pasha Centres ............................................................... 22
3.3. The Pasha Process ......................................................................................... 24
3.4. Access to Financial Support ........................................................................... 26
3.5. The running of a Pasha Centre ...................................................................... 27
3.6. The Range of Services Offered ...................................................................... 28
3.7. Capacity Building and Training for Pasha Managers ....................................... 28
4.0.
4.0 Project Performance ........................................................................... 30
4.1. Project Status So Far – Deloitte’s Project Monitoring & Evaluation ................ 30
4.2. Project Success and Challenges ..................................................................... 31
5.0.
5.0 Case Studies ...................................................................................... 36
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5.1. A Success Story from the Foot of Mount Kenya .............................................. 36
5.2. The Struggling Entrepreneur.......................................................................... 36
5.3. The Centre That May Close Down .................................................................. 38
6.0.
Lessons Learnt and Recommendtions ........................................................... 40
6.1. Implementing Pasha: Learning the Hard Way ................................................ 40
6.2. Mitigating Against the Challenges: The New Pasha Framework ...................... 40
6.3. Viability of Other Government Financing Options .......................................... 43
6.4. Recommendations ......................................................................................... 43
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Acronyms
AMFI
Association of Micro-Finance Institutions
CAK
Communications Authority of Kenya
CLIC
Community Learning Information Centres
CBO
Community Based Organization
DSTV
Digital Satellite Television
DV
Digital Village
GITS
Government Information Technology Services (GITS)
GoK
Government of Kenya
IBSG
Internet Business Solutions Group
ICDL
International Computer Driving Licence
ICT
Information and Communications Technology
ICTA
Information and Communications Technology Authority
IEBC
Independent Electoral and Boundaries Commission
ISP
Internet Service Provider
IT
Information Technology
ITES
Information Technology Enabled Services
KCPE
Kenya Certificate of Primary Education
KCSE
Kenya Certificate of Secondary Education
KENET Kenya Education Network Trust
KICTB
Kenya Information & Communications Technology Board
KRA
Kenya Revenue Authority
KTCIP
Kenya Transparency Communication Infrastructure Project (KTCIP)
M&E
Monitoring and Evaluation
MFI
Micro Finance Institution
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MoIC
Ministry of Information and Communications
MTP
Medium Term Plan
NGO
Non Governmental Organization
PIN
Personal Identification Number
PPC
Pilot Pasha Centres
PPP
Public Private Partnership
RFP
Request for Proposal (RFP)
SLA
Service Level Agreement
TYB
The Youth Banner
TOEFL
Test of English as a Foreign Language
USAID
United States Agency for International Development
VSAT
Very Small Aperture Terminal
WEF
Women Enterprise Fund
YEDF
Youth Enterprise Development Fund
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Executive Summary
The Internet continues to be the key driver in the pursuit of a knowledge-based economy. This is
because Kenya’s Vision 2030 blueprint has identified ICT under its economic pillar, as a primary driver.
However, it has also been recognized that there is a big disparity in Internet access between the urban
dwellers and their rural counterparts. The ICT Authority is addressing this gap through the “digital
villages” project dubbed “Pasha” which seeks to - through rural access - increase online information
and therefore, facilitate job creation.
The objective of this handbook, apart from creating a narrative of the project, is to provide various
stakeholders with the necessary information on how and why the Pasha project was initiated, its vision,
implementation and expected impact. In other words, this is a handbook that gives a factual
presentation of the project initiation, planning, implementation, monitoring and evaluation.
There is evidence of improved ICT literacy and capacity for consumption, deployment and local
production of ICTs across all sectors.
For instance, according to the statistics from the
Communications Authority of Kenya (CAK), the total number of Internet users in the country more than
tripled between 2009 and 2014.
The Pasha project complements other similar initiatives that have or are also impacting and creating a
demand for the ICT infrastructure. These include Huduma Centres, the USAID-supported CLIC Project
and the VSAT-based Internet connectivity project that was operated by the Postal Corporations of
Kenya. Post offices are located in all parts of the country and have been identified as ideal facilities
for developing digital villages.
Pasha Centres access financial support through a revolving fund sourced from the Government through
the ICT Authority. Entrepreneurs are invited to compete for the funds through a call for proposals that
is broadcast in a variety of media. The funds are released through the Family Bank. The revolving fund
component of the project kicked off in January 2011 after the bank was recruited through competitive
bidding.
As with any new initiative, the Pasha project has had its share of successes and challenges.
Among the challenges faced by some entrepreneurs are: lack of business and entrepreneurial acumen,
quality and cost of the Internet bandwidth, lack of technical support, suitable premises, marketing,
lack of Pasha branding, non-uniform bouquet of services and service delivery and stiff competition
from other operators.
Others challenges include poverty, low literacy levels, increased mobile phone and WiFi penetration,
unreasonable licensing demands by local authorities and the rural-urban migration where young
potential Internet users leave for towns and cities behind older less educated relatives in the rural
areas.
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The effect of all these challenges is reflected in the low levels of business seen so far and the high
default rates in loan repayments to the financial intermediary, Family Bank. For example, as at the
end of the financial year ending on June 30, 2014, half of the KSh. 75,844,647 disbursed in both Rounds
One and Two are considered to be at risk.
The ICT Authority recognized quite early that these challenges needed to be addressed if the program
was to meet its original objective of bridging the rural-urban digital divide. A business development
company, The Youth Banner, was brought on board in 2013 to assist in providing solutions to these
challenges. Based on ICTA’s input and that of Deloitte and Touche, the Monitoring and Evaluation
consultants, a New Pasha Framework has been developed.
The highlights of the new framework are greater business and financial discipline, and the
standardization of the Pasha Brand. The vision driving the new approach is also to standardize business
operations in all Pasha Centres across the country with the aim of:

Helping Pasha Centre managers reduce the expense and the time-consuming effort of starting a
Pasha Centre from scratch;

Improving, increasing and marketing the bouquet of services currently provided by Pasha
Centres,

Providing a long-term sustainability framework for the centres.
Due to its past performance, the Pasha project, at the moment, appears vulnerable.
It has not
disbursed any loans since 2011 and has a portfolio of risky debts in because of a changed environment
brought about by increased mobile connectivity and stiff business competition from other ICT-related
businesses.
Recommendations
The Pasha project has been partially successful in fulfilling its mandate and objectives. Stakeholders,
at information gathering sessions, recommended that in order to move the project forward, there was
need to revise the current approach. The following recommendations were proposed:

The recruitment process of Pasha Managers should be reviewed so that emphasis is placed
equally on face to face interviews rather than just on how well a business plan is written. It
was also proposed that the business location be inspected for suitability before a candidate is
declared successful;

The New Pasha Framework be introduced to all stakeholders and the rural communities and the
bouquet and quality of services be standardized and procedures and facilities put in place;

Negotiations with the Ministry of Devolution & Planning be initiated to request that Huduma
Centre services be provided at a fee in the Pasha Centres after the training, branding and
standardization of services have been completed;
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
The review of the grace period between financing and loan recovery be done so that it is
extended to at least 6 months to allow businesses to settle down;

There is need to lobby the government for the implementation of the Universal Service Fund so
that each major telecommunication company contributes one per cent of its revenue to
finance Digital Inclusion projects such as Pasha;

Aggressive marketing, branding and awareness creation of the Pasha Centres as governmentsupported projects to the local authorities and communities;

Development of a standard curriculum that is recognized by the Ministry of Higher Education
for the Pasha Centres and that will be used in training entrepreneurs.

Closer monitoring of individual Pasha Centres to ensure the similar levels of service delivery
and standards are maintained throughout the country;

Continuous training of operators and the introduction of new business ideas so as to keep up
with the times and;

Consideration of extension of the bandwidth support program.
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1.0.
The Pasha Handbook: Scope of Work
The aim of producing this handbook was so to document the facts of the Pasha project initiation,
planning, implementation, monitoring and evaluation. During the month of June, 2014, ICTA hired a
consultant who under the guidance of the Pasha team and the communications writer, gathered
material on tele-centres and Pasha Centres specifically to:

Collate information on tele-centres.

Collate project information on Pasha Centres.

Produce a project story with specific reference to project planning and implementation.

Outline how the Pasha Project has impacted the lives of communities around the centres and
the challenges the centres are facing and a vision of the way forward.
In order to fulfil the above mandate, information was gathered from around the country. The stories
were told by Pasha managers at their respective business centres. The following towns were visited:
Kamukunji in Nairobi, Masalani (near Garissa), Nanyuki, Athi River, Machakos, Nakuru, Kapsabet,
Kisumu, Pap Onditi (near Kisumu) and Narok.
From these visits, a number of observations were made and are noted in the handbook. They comprise
three case studies – each with a story to tell. The first one demonstrates that Pasha is can be success
story; the second is that of a struggling entrepreneur; and the third is that of a centre that may soon
close down.
It is hoped that the case studies will be reference points for stakeholders who need to understand the
successes and the challenges of running a Pasha Centre. The stories should provoke thinking on how the
Pasha project could be improved or reengineered.
1.1.
Background: An Overview of the ICT Industry in Kenya
ICT is one of the fastest growing sectors in the country. It is one of the catalysts of the government’s
goals and objectives of the creation of wealth and employment towards the realization of national
development goals as well as the achievement of an information-based society.
Already, an Information and Communication Technology (ICT) revolution is taking place in Kenya - in
schools, in the transport and banking industry and many other areas in rapidly developing urban areas.
The ICT industry is transforming Kenya and the lives of its citizens.
There is evidence that ICT literacy and capacity for consumption has improved as seen in the way many
sectors including the music industry have been impacted around us. According to the statistics from
the Communications Authority of Kenya (CAK), the total number of Internet users in the country more
than tripled between 2009 and 2014, increasing from 6,385, 302 in Quarter 3 (2009/2010) to
21,679,309 in Quarter 3 (2013/2014). This represents a growth of 240% within a 5-year period.
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The deployment of the fibre-optic cable infrastructure by the government and the private sector has
gone a long way in laying the foundation for the government and companies to take advantage of ebanking, e-commerce, e-learning, e-health and other e-based processes and transactions. This has
made Kenya a prime destination for ICT investment and business process outsourcing.
The industry, the academia and ordinary citizens are now able to aggressively leverage business
innovations in partnership with hardware and software manufacturers in driving economic and social
growth. All this is fuelled by a growing middle class and a talented pool of very imaginative youth who
make up over 60% of the local population.
The Kenya ICT Board, the precursor of the ICT Authority (ICTA), was established in 2007 as a state
corporation under the State Corporations Act Cap. 446. Its vision was to establish Kenya as a Top 10
ICT hub while its mission, on the other hand, was to champion and actively enable Kenyans to adopt
and exploit ICT.
This objective was going to be achieved through the promotion of partnerships,
investments, and infrastructure growth - all for socio economic enrichment.
About the ICT Authority
The Information and Communication Technology Authority is a State Corporation under the Ministry of
Information Communication and Technology. The parastatal was established in August 2013 with 3
broad objectives:

The development of ICT infrastructure

ICT promotion and marketing

Capacity building in government, industry and in society
The government, through a Presidential Executive Order, transferred the Government Information
Technology Services (GITS) and the Department of e-Government (DeG) from the Treasury and Cabinet
Affairs ministries respectively to the Ministry of Information, Communications and Technology (MoICT).
Soon thereafter, the Kenya ICT Authority was established as a parastatal under the ministry. It then
took over the functions previously performed by the Kenya ICT Board (KICTB).
There is no doubt, however, that the establishment of the three former agencies has led to the
tremendous development now being seen in the ICT landscape in Kenya. In the last ten years, ICT has
become a key agent in transforming the way the government delivers services to the public, and there
is a lot of expectation that the ICT Authority will continue to play a crucial role in achieving the
Government’s ICT agenda.
An excerpt of the ruling coalition, Jubilee’s manifesto underscores the progress as follows:
“A lot of progress in the ICT Industry has taken place since the introduction of the ICT Policy Paper in
2006. Key accomplishments such us building of the relevant ICT infrastructure and legislation of
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comprehensive policy, legal and regulatory frameworks are already bearing fruit to the industry. A lot
of the listed challenges then are impressive works in progress such as local content development,
universal access and e-Government.”
The Functions of the ICT Authority
The following are the functions of the ICT Authority:
a) Set and enforce ICT standards and guidelines in the areas of human resource, infrastructure,
processes, systems and technology in public offices and in delivering public services;
b) Deploy and manage all ICT staff in the public service;
c) Facilitate and regulate the design, implementation and use of ICTs in the public service;
d) Promote ICT literacy and capacity;
e) Promote e-Government services;
f)
Facilitate optimal electronic forms, electronic record and equipment use in delivering public
service;
g) Promote ICT innovation and enterprise;
h) Establish, develop and maintain secure ICT infrastructure and systems;
i)
Supervise the design, development and implementation of critical ICT projects across the
public service; and
j)
Implement and manage the Kenya National Spatial Data initiative
The Authority aims to rationalize and streamline the management of all Government of Kenya ICT
functions. It also aims to advise the Government on sectoral development and ICT project
implementation and investment. The Authority shall enforce ICT standards in the Government and
enhance the supervision of its electronic communications under the National Messaging theme: “One
Government, One Voice.”
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1.2.
Vision 2030 and ICT
Vision 2030 is the national long-term development blue-print that aims to transform the country into a
modern, globally competitive, middle income country that will offer a high quality of life for all
citizens by the year 2030. The Vision is being implemented through a succession of five year Medium
Term Plans (MTPs). The first MTP (2008-2012) implemented the first five years of the Vision. The Vision
comprises of three key Pillars: Economic, Social, and Political.
The economic pillar aims to achieve an average economic growth rate of 10 per cent per annum. The
pillar’s aim is to sustain this rate until 2030. The social pillar seeks to engender a just, cohesive and
equitable social development in a clean and secure environment. The political pillar aims to realise an
issue-based, people-centred, result-oriented and accountable democratic system.
The theme of the second MTP (2013-2017), which coincided with the coming into power of the new
Government after the 2013 elections, is, “Transforming Kenya: Pathway to Devolution, Socio-Economic
Development, Equity and National Unity.” The MTP gives priority to devolution as spelt out in the
Kenya 2010 constitution and to more rapid socio-economic development with equity as a tool for
building national unity.
The second MTP also aims on building on the successes of the first MTP, particularly in increasing the
scale and pace of economic transformation through infrastructure development, and strategic emphasis
on priority sectors under the economic and social pillars of Vision 2030. ICT is one of the foundations
for economic development in the second MTP of Vision 2030, with the theme, “strengthening the
foundation for a knowledge economy”.
ICT is a critical tool in Kenya’s vision of a knowledge-based economy. The aim of this is to shift the
current industrial development path towards innovation where creation, adoption, adaptation and use
of knowledge will be the key to economic growth.
In the second MTP, ICT will be concerned with:

Upgrading the national ICT infrastructure;

Improving public service delivery;

Developing the ICT industry; and,

Upgrading ICT capacity.
Notably, ICT is a secondary driver in the Vision’s social and political pillars; whose goals are to create a
just cohesive and equitable society and to realize - as stated before at the beginning of this section an issue-based, people-centred, result oriented and accountable democratic system.
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Consistent with these efforts, the Kenya ICT Authority has developed a Strategic Plan where its vision is
“to make Kenya a world-class centre of excellence in ICT”. Coupled with this, IT Enabled Services –
ITES- (previously known as Business Process Outsourcing) is one of the flagship projects of Vision 2030.
1.3.
KTCIP and Digital Inclusion
The Kenya Transparency Communication and Infrastructure program (KTCIP) Program is a national
program that was initially implemented by the former Kenya Information, Communication and
Technology Board (KICT Board) which has now been absorbed by the ICT Authority. The KTCIP Program
is funded through an International Development Association (IDA) credit given to the Government of
Kenya.
Kenya TCIP Program Goals and Objectives
The goal of the program is to boost ICT connectivity in the country, to improve service delivery to
Kenyans, to increase type and quality of information from and to the citizens, and to increase the
government’s ability to ensure transparency by December, 2016.
In order to meet the KTCIP program goals, over the years, emphasis has been placed on the following
two development objectives:
 To contribute to the lowering of prices for international capacity and to extend the geographical
reach of broadband networks;
 To contribute to the improved efficiency and transparency of selected government functions
through e-Government applications.
The Main KTCIP Program Interventions
The KTCIP program operates under the thematic areas of:
 Digital Inclusion;
 Local Content and,
 e-Government applications;
 Shared Services; and,
 Business Process Outsourcing (BPO) and IT Enabled Services (ITES)
This handbook specifically addresses Pasha or Digital Villages, a project under Digital Inclusion and
therefore, does not cover in detail Local Content and e-Government Applications projects.
Digital Inclusion
This Digital Inclusion component of KTCIP refers to all the efforts and activities that are aimed at
improving and increasing ICT access to the rural communities, local universities and research
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institutions. In essence, it seeks to support the various segments of the society in order to facilitate
the increased use of local Internet bandwidths to access information and to take advantage of the
various services offered online
Through the government-supported “digital villages” program, Pasha, the idea is to increase rural
access to information and to facilitate job creation by providing funding to individual entrepreneurs to
help them set up information centres. Another goal of the Digital Inclusion component is to support
local universities and research facilities by providing affordable Internet bandwidths and related
equipment under the umbrella of Kenya Education Network Trust (KENET). The ultimate objective of
KENET is to enable participating universities and research institutions to share information with both
their local and international counterparts.
Over the period of its existence, the Digital Inclusion component has recorded achievements which are
summarized below under each key result area.
Pasha Centres (Digital Villages)
The name “Pasha” has its origins in the Kiswahili word “KuPasha” that means “to inform”. The Pasha
Centres initiative came about as a result of the realization that most of the ICT facilities in Kenya are
in the urban areas, the result of which was a glaring disparity between urban and rural areas in the
distribution of ICT facilities.
The Pasha project is an integral part of an innovative initiative that takes ICTs to the rural communities
in Kenya. The services provided by the Pasha Centres include government and community based
services as well as a number of commercial services.
The initial plan was to have a Pasha Centre in each of the 290 constituencies but currently, due to
various setbacks, only 39 centres were operational as at the end of June, 2014. The Pasha story is,
therefore, a catalogue of both success and, largely, challenges which are covered later in this
handbook.
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2.0. The Pasha Project Highlights
2.1. Why the Government Supports Pasha Centres
Pasha Centres or Digital Villages, as explained before, are ICT hubs of access to online information and
are operated under a Public Private Partnership (PPP) model. They are run by entrepreneurs who,
initially, through KICTB and now ICT Authority, obtained training in a business and information
technology based certified training program. Initially dubbed “tele-centres”, digital villages are outlets
that provide a range of services to the public through computers connected to the Internet.
The Government of Kenya (GoK) aims to achieve an information-based society as one of its main
priorities towards the realization of national development goals whose objectives are wealth and
employment creation. The provision of ICT in the rural areas plays an important role in enabling
economic and social development and is one of the fastest growing sectors in the country. The
harnessing of ICT will enable the Government to realize a number of its key public policy objectives.
Broadband networks have profoundly changed the social environment in which we live, work and
interact. “The rapid spread of access to information and communications services is changing the way
society and business work in Africa,” states Mohsen A. Khalil, the Director of the Global Information
and Communication Technologies department at the World Bank. He adds that by “allowing families to
stay in touch with each other, governments to deliver services more effectively, and businesses to
operate more efficiently”- Broadband for Africa: Developing Backbone Communications Networks, M J
Williams, 2010, The World Bank, (http://www.infodev.org/en/Publication.526.html)
ICT programs in the rural areas operate in traditional community gathering venues such as markets and
shopping centres, using a common portal that links multimedia personal computers by satellite or a
mobile network.
The computers enable better access to information such as local weather forecasts, crop price lists in
nearby markets, and the latest farming techniques.
Some of the centres also maintain web sites that offer its members timely information about
agricultural events and where they can promote or sell their products.
Remarkable increases in online purchases have been achieved such as through the local mobile phone
application, Mpesa. It is within this context that the Pasha project aims to empower rural communities
in creating employment and wealth. This, in turn, would lead to socio-economic enrichment.
However, because ICT facilities in Kenya have traditionally been located in urban areas, this “digital
divide” has resulted in glaring disparities between urban and rural areas in the availability of ICT
facilities. To address this gap, the Kenya ICT Board, embarked on a Digital Villages Project (DVP) in
2011 under the Kenya Transparency Communications Infrastructure Program.
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2.2. The Objectives of Pasha Centres
In order to address the disparity in access to the Internet between the urban Kenyans and their rural
counterparts, the KICTB, in 2011, started to roll out Pasha Centres. Its successor, the ICT Authority,
continues to be the implementing agency for the project.
The establishment of Pasha Centres has been achieved through providing funding to entrepreneurs who
operate the businesses in the rural areas and a few semi-urban centres. These centres offer Internet
connectivity to the rural population, bridge the digital divide, and provide training and online access to
government services.
When Kenyans in rural areas access online information, this enables them to:

Enhance business skills and knowledge as well as to expose them to world news, information
and trends that may positively improve their lives;

Provide direct employment to Kenyans through economic activity that the centres generate
and, indirectly, through economic opportunities that the information gained will generate;
and,

Bring government activities and other online information and services closer to rural
communities.
Besides providing access to email, social media and online information and bureau services –
photocopying, document printing and binding and so on - innovative operators have introduced other
services such as taking digital photographs, video and video editing, selling stationery and mobile
phone airtime. At the same time, others are offering ICT skills training.
2.3. How ICT Authority Manages the Project
The ICT Authority manages the Pasha project through a team comprising of:

The Project Manager, Digital Inclusion, who is responsible for the overall Pasha project;

Project Assistant (assists with the implementation of the Pasha Project); and,

The Monitoring and Evaluation (M&E) Manager who monitors and evaluates projects.
The team members listed above report to the CEO. The team is also in constant touch with Pasha
Managers through the phone and regular physical visits. It liaises with Deloitte for its M&E activities as
well as Family Bank on loan disbursements and the financial performance of the project
2.3.1
Governance and Conflict Resolution
The project has a Governance Officer who addresses all project risks, receives all complaints and
responds to them. The officer is also available to assist in resolving conflicts that may arise.
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The Board of Directors and its Chairman provides the overall oversight over all activities and report to
the Principal Secretary in the Ministry of Information, Communications and Technology, who is also a
member of the Board.
The Revolving Fund
Pasha Centres access financial support through a revolving fund provided by the Government through
the ICT Authority. The government secured the funds from the World Bank in form of a loan.
Entrepreneurs are invited to compete for the funds through various media and the funds are released
through a financial institution, the Family Bank to successful applicants. The fund is supposed to be
self-sustaining - as the entrepreneurs repay their loans with interest, the funds will lend to new
beneficiaries.
2.4. Bandwidth Capacity Support
The cost of Internet bandwidths is still higher in the rural areas than in the urban centres. Based on
this, the project implementation team identified the bandwidth as a possible constraint to Internet
access in the rural areas. It decided to support the Pasha Centres by providing centres with a subsidy
that would make it possible for centres to pass on savings made on the cost of Internet access, to their
customers.
The 90% subsidy which was launched in November, 2013 was to be provided for a period of 18 months
after which it was envisaged that the Pasha businesses would have stabilized enough to pay the full
cost of the bandwidth. The programme is still running.
The objective of this initiative was to make it possible for Pasha Centres to purchase quality Internet
access and affordable connectivity for Pasha Centres, which in turn, would enable information sharing
and facilitate affordable access to information in the rural areas.
2.5. Implementation of the Pasha Bandwidth Capacity Support
During the course of the project implementation, The ICT Authority appraised all Pasha Centre
operators on how the bandwidth support would be implemented and this included details of the
eligibility criteria. The Authority negotiated prices and signed contracts with a number of Internet
Service Providers (ISPs) that included Liquid Telecom, Orange, SimbaNet and Extranet. The selected
ISPs had to register with the Communications Authority of Kenya (CAK) as a pre-condition to participate
in the programme.
Pasha Centre operators, who opt for bandwidth subsidy, are required to choose from the list of eligible
ISPs and to enter into individual contracts with the respective ISPs. At the end of each quarter, the
Pasha operator/manager and their individual ISP make out invoices at the agreed Internet bandwidth
17
price. The Authority then settles 90% of the invoice while the Pasha operator pays for the remaining
10%. The subsidy does not include the cost of equipment.
Roles and Responsibilities of Bandwidth Support Stakeholders
Stakeholder
ICT Authority
Responsibilities
 Dissemination of information on how the bandwidth support is
implemented
 Management and coordination of stakeholders
 Payments to qualified ISP’s
 Monitoring and evaluation.
Pasha Centre Managers
 Meeting application qualification criteria
 Sourcing eligible ISPs
 Securing of contract with eligible ISPs
 Signing off on payment requests
 Promptly meeting the cost of bandwidth not covered by the ICT
Authority.
Internet Service Provider
 Provide bandwidth as per contractual obligation
 Provide reports on bandwidth usage
 Bill the Pasha Centre and ensure that both a copy of the invoice and
bandwidth usage report are sent simultaneously to the ICT Authority
Observation:
The general consensus of most Pasha Operators is that the subsidy support program has reduced
operational costs and made connectivity faster and more reliable despite a few intermittent service
interruptions. Where persistent complaints arise, the ICTA is alerted for remedial action.
3.0. The Pasha Project Story
The Ministry of Information and Communications (MoIC) conceived the “Digital Village” idea in 2006. It
wanted to exploit ICT in rural development. This was going to be done by providing ICT access to
government information, potential outsourcing of government services, and a host of other
applications. It was determined that Pasha Centres were to be the Flagship Centres or Centres of
Excellence for other Digital Villages (DVs) to emulate and that they would play a distinct and
influential role in the overall DV strategy.
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In October, 2007, Alcatel-Lucent, an international telecommunications company, was awarded a US$
79 million contract by the government to lay the first undersea fibre optic cable in Kenya. Construction
began in January 2008 on the United Arab Emirates' side and on 12th June, 2009, the cable arrived at
the Kenyan port city of Mombasa and was officially launched by the former President, Hon. Mwai
Kibaki.
As the plans for the implementation of the submarine fibre optic cables that would deliver broadband
connectivity to Kenya firmed up, several initiatives were started to drum up the benefits of having
Digital Villages with good Internet access. Both the public and the private sectors were enthusiastic but
there was a problem – the efforts and measures taken, although well-intentioned, were largely
uncoordinated.
The result was that the excitement led to the mushrooming of cyber-cafés whose uneven distribution
(they were mostly concentrated in urban areas), did not benefit or help to bridge the social, economic
or digital divide. Coupled with this were unsustainable business models that resulted in no real Internet
penetration. The result was that the population largely remained untouched by the benefits of digital
connectivity.
The Digital Village ecosystem in the country includes various other players such as CBOs, NGOs, Telcos,
churches, co-operatives, development partners and cyber-cafés.
essential subset of this ecosystem.
Pasha Centres are, in effect, an
However, its Public Private Partnership (PPP) model clearly
distinguishes it from these other initiatives.
3.1. Government Funded Digital Villages
The Kenya ICT Board was established In February, 2007.
The activities of the Board were focused on
positioning and promoting Kenya as an ICT destination locally and internationally. The KITCB reported
directly to the MoIC. In August, 2013, the newly established ICT Authority took over all the functions
of the KICTB, Department of e-Government and the Government Information Technology Services
(GITS).
The ‘Pasha’ Project was launched by the KICT Board using a US$ 4m World Bank grant. It was set up
under its Digital Inclusion initiative whose aim was to assist entrepreneurs to set up digital village
centres all over the country.
3.1.1
Parallels Against USAID’s Community Learning Information Centres
As mentioned earlier, the Digital Village ecosystem in the country includes various other players
besides the Pasha project.
One of these is the USAID-sponsored Community Learning Information
Centres (CLIC) project.
19
Between 2007 and 2008, the Directorate of e-Government in the Presidency and Cabinet Affairs Office,
in collaboration with USAID Kenya, identified the need to promote access to online services in remote
areas of the country in order to address the digital divide. This was, at the time, aligned to other
initiatives by USAID in other countries under the Last Mile Initiatives. A programme dubbed Community
Learning Information Centres (CLIC) was then started with the aim of exploiting opportunities provided
by ICTs to support government initiatives to provide services to Kenyans.
CLIC was also seen as one way of providing entrepreneurship opportunities that would generate wealth
through leveraging on technology, infrastructure, micro-financing and entrepreneurial experience to
provide affordable technology to communities especially in the rural areas.
As part of this program, as mentioned earlier, 14 sites at the constituency level were identified across
the country. The selection of the sites was based on national poverty indices and the need for national
distribution. The sites identified were Bonchari, Ganze, Ikolomani, Imenti Central, Oloitokitok (Kajiado
South), Kinango, Kitui South, Kuria, Mandera East, Mbita, Mukurweni, Nambale , Sabatia and Ugenya.
The project was launched in Ugenya, Siaya County, in March 2011.
Progressive youth groups and
community based organizations were thereafter identified with the assistance of the then Ministry of
Gender and Social Services and the Ministry of Youth Affairs. It was decided that the identified youth
groups were to host and solely run the sites with minimal support and innovatively sustain the sites at
the community level. Each of these sites was to receive 5 computers, a printer as well as an Internet
link using low cost networks.
The selection criteria were based on: i) Well established youth groups that were registered by the
Ministry of Gender and Social Services ii) Proof of operation for an acceptable period iii) Availability of
a secure own or rented premises with electricity iv) Not situated in a urban centre with cyber cafes.
The CBO was to:

Solely run the sites with minimal support and to come up with innovative programs that would
sustain the sites as well as oversee their growth;

Provide business services, computer training, e-mail services, Internet surfing as well as
distance learning to the local education institutions and the community at large;

Provide a wide range of information including government information and eventually slowly
scale up to provide advanced online services and opportunities e.g. interactive e-government,
e-commerce, business process outsourcing, distance learning etc.;

Provide secure premises with electricity supply; and,

Meet all the running costs including rent payments of the facility on a day to day basis.
In order to reduce risk, the Directorate involved the Ministry of Youth Affairs who had officers in the
field, in the monitoring of projects on its behalf. Towards this end, a tripartite Memorandum of
20
Understanding (MOU) was drawn between the Directorate of e-Government, Ministry of Youth Affairs
and the beneficiaries of the project (identified CBO’s or Youth Groups).
CLIC Project Status
Updates regarding the current status of the CLIC Project have not been regular. Their website has been
down and getting up to date information has not been easy. The last report dates back to around 2012
and it indicated that most of the sites were still operational at the time and that they continued to
offer services although some of the computers had broken down and had not been repaired. Most sites
were providing IT training, photocopying services and access to online services such as examination
registration, KRA PIN applications and so on.
Some sites had not been installed due to lack of funding despite the fact that the equipment meant for
the sites was available. Support for the groups had equally been hampered by budget constraints.
Challenges encountered include:

Lack of an efficient reporting mechanism from the field;

Lack of budget provision to ensure regular monitoring of the sites as was planned. There had
been no visits to some sites as part of monitoring since the time equipment was distributed
and,

Unstable Internet connectivity and at times there is no connectivity at all.
CLIC Project Evaluation
It has been recommended that there was a need to assess all project implementation challenges with a
view to coming up with strategies that would address the challenges and enhance the performance of
the sites as online delivery channels of government services to rural areas. The lessons learnt during
the assessment would provide important information that can be referred to when implementing
similar projects in the future.
21
Similarities in Challenges Facing Two Projects
From CLIC’s experience, it would appear that projects which have implemented digital villages in the
rural areas in Kenya face similar challenges. These problems include but are not limited to:

Lack of entrepreneurial and innovative business skills that can enable managers to spot and act
on market opportunities;

Limited IT knowledge and lack of technical support among the operators;

IT literacy and lack of appreciation of the benefits of using the Internet among local people;

Lack of content that appeals to the local audience;

Reliable connectivity;

Lack of a strong awareness drive and marketing of Digital Villages and,

Poverty levels that limit spending of money on basic needs as opposed to DVs.
3.2. The Evolution of the Pasha Centres
When the Kenya ICT Board (KICTB) engaged with Cisco Internet Business Solutions Group (IBSG), they
recognized the need for a government-compliant model that would be scalable, sustainable and
deployable throughout the country. One that would provide a framework for all models once the
anticipated World Bank funds for the Digital Village component of their Transparency and Regional
Communications Infrastructure Programme became available.
Before the launch of the Pasha project, a pilot study was conducted by Cisco. Six cyber-cafes were
identified by the KICTB across peri-urban and rural communities as having potential for the Pilot Pasha
Centres (PPCs). They were to become an integral test-bed for research and monitoring of services and
user behaviour that would eventually contribute towards a sustainable business model.
The first PPC opened in Kangundo in Eastern province in August, 2009. The plan was to roll out five
other pilot Pasha Centres in: Malindi in the Coast province; South Imenti in the Eastern province;
Garissa in the North-Eastern province; Siaya in Nyanza province; and Mukuru wa Kayaba in Nairobi.
The sites were selected on the basis of their geographic distribution and the fact that they covered
semi-rural and rural populations. This was seen as an important step towards extending coverage and
promoting digital inclusion in rural communities. Once established, the six centres were to run for a
four-month period to enable stakeholders to perform a baseline study to monitor community usage and
services.
This baseline survey was going to be used to determine the most appropriate business and operating
models for Pasha entrepreneurs and their potential business partners as well as to test the portfolio of
solutions were provided in each centre.
22
By April 2010, five PPCs equipped with 512k connectivity, WebEx, power surge protectors, projectors,
printer, scanner and fax machines were up and running. PPC entrepreneurs and managers were
trained, they exchanged information and connected on a regular basis to the Pasha portal.
The PPCs also became centres for gathering and collating baseline findings that would lend further
insights into the Service Level Agreement (SLA) models, usage frequency and content, pricing, training
needs, connectivity and infrastructure issues, client profiles, revenues and profits, impact on
businesses in the area, scalability, services sought specifically by communities, and the capacity to
meet challenges.
The baseline study, conducted by Synovate, helped KICTB to identify six core factors essential for the
success of a Pasha Centre:

Physical infrastructure such as reliable power supply and Internet connectivity;

Support services;

Marketing for awareness and education;

Entrepreneurial initiative in customer service and experience;

Broadening and innovating Internet use for business collaboration, edutainment; and,

Training accreditation for the various vocational e-learning courses.
To get the Pasha project off the ground, the KICTB put in place the Pasha Capacity Development
Program (PCDP) and structured it to ensure that prospective entrepreneurs would acquire the skills
needed for their business success. In 2009, the Board launched the program and trained 1061 potential
entrepreneurs who were drawn from every constituency in the country. A key focus of the training was
entrepreneurship to enable trainees to develop bankable business plans.
A financial intermediary, the Family Bank, was then contracted to offer loans to successful prospective
entrepreneurs in order to assist them in setting up the Pasha Centres. When loans were repaid with
interest within 36 months, the funds would be used to finance future Pasha entrepreneurs – creating a
revolving fund.
In January, 2011, the Board made the first call for proposals (Round One) and a second one (Round
Two) in November, 2011. The outcomes of these calls for proposals are discussed in Section 4.4.2.
Depending on a Pasha manager’s eligibility, there are three categories of centres that have been
funded. These are Basic, Standard and Advanced centres which are classified as follows:
23
Pasha Model Description
Description
Number of Computers
Estimated Setup Cost
Basic
5
Ksh.
Standard
10
Ksh. 2,553,000/-
Advanced
20
Ksh. 3,342,000/-
820,000/-
As the project got off the ground, ICTA contracted Deloitte consultants in 2012 in order to get
feedback and to ensure that the project remains on track.
Acknowledging the challenges faced by some of the managers who lack adequate business skills, a
business development company, the Youth Banner was brought on board by the Authority in 2013
through competitive bidding. The company has held training sessions and provided one-on-one site
visits to a number of Pasha Centres so as to provide them with business counselling. They have also
developed a Pasha business portal through which the various Pasha entrepreneurs can communicate.
3.3. The Pasha Process
The Selection of Pasha Managers
Prior to the recruitment process, KICTB had trained 1,060 potential Pasha managers who represented
every constituency countrywide. A key focus of the training was entrepreneurship to enable the
trainees to develop bankable business plans. The target audience for the training were individuals,
youth groups, self help groups, public and private institutions, businesses enterprises comprising sole
proprietorships, partnerships and companies.
In January, 2011 the Board made the first call for proposals (Round One), attracting 689 applicants out
of whom 37 were selected for funding. A second call for proposals (Round Two) was made later in
November, 2011 and it closed the following month, in December, 2011. This round attracted 456
applicants. Only 26 were found to be eligible for funding. This information is summarised below:
Summary of Calls for Proposals
Round of
Total Number of
Number of Successful
Total
Applications
Applicants
Applicants
Disbursed(Ksh)
Round One
689
37
53,035,091
Round Two
456
26
27,955,500
1145
63
75,844,647
Total
Money
24
The number of centres operational as at June 30, 2014: 39
Observations:
From these figures, it is clear that not all the successful applicants took up the offer to for funding.
From interactions with the current Pasha operators, it would appear that some of the successful
applicants later realized that although they had submitted bankable proposals, they did not feel
confident enough to venture into a technology-oriented business. This could raise the question as to
whether all the managers had, in the first place, written the business plans themselves or whether
someone else had done so on their behalf.
This is an aspect of the project that any future recruitment process will have to address. As stated
before, it has been recommended that besides the written proposal, a face to face interview will be
mandatory to enable recruiters to assess the candidate’s readiness and their motivation for wanting to
venture into a business such the Pasha Centre.
Selection of the Bank
Family Bank, the financial intermediary that was appointed to disburse the Pasha project funds, was
sourced through a competitive bidding process. The request for Expression of Interest for the project
appeared online in the United Nations Development Business in November, 2007 under the heading:
“Management Services for Implementation of Digital Villages Revolving Fund”.
Eligible Banks/MFI
(Micro Finance Institutions) were required to indicate their interest in providing the following services:

Supply loans to the Pasha Digital Village Managers from the Revolving Fund in line with TCIP
project policy and procedures and the Bank's/MFI's administrative procedures;

Carry out operations related to the lending process in respect of applicants for the loans to
start new Digital Village Centres or scale up the existing ones; and

Follow-up and recovery loans.
25
Interested Banks/MFIs were required to provide evidence of the following:

Proven experience in the Management of Revolving Funds;

Having been in operation for more than 10 years;

Having accountants with five (5) years of experience and be Certified Public Accountants of
Kenya (CPAK) certified;

A customer base of at least 30,000 customers;

A national coverage (preferably a presence in all constituencies);

The ability to offer Sharia compliant products;

Rate of loans repayment of more than 90% on average during the last three years;

A minimum average annual turnover of KShs.100,000,000 for the previous 3 years and to
provide the annual reports for the period

Be a registered member of the Kenya Bankers Association in the case of a bank;

Be a registered member of the Association of Micro-Finance Institutions (AMFI) in the case of
MFI;

ICT enabled accounting system capable of producing monthly reconciliation reports;

Good internal and budgetary control systems; and,

Sound banking arrangements.
Banks/MFIs were allowed to team up with other institutions to enhance their qualifications.
Following the Expression of Interest, Kenya ICT Board issued Request for Proposal (RFP) to the
shortlisted Banks/MFIs only. After the evaluation of all the RFPs received, Family Bank was awarded
the contract based on merit in accordance with the procedures set out in the World Bank’s Guidelines:
Selection and Employment of Consultants by World Bank Borrowers (Published May 2004, revised
October 1, 2006 & May 1, 2010).
3.4. Access to Financial Support
Family Bank has given loans to successful applicants at an annual interest rate of 10.5%. This is well
below the prevailing market interest rates (15% and 26%) being offered by commercial banks in the
country. Upon being selected, Pasha managers are required to submit to the bank quotations and
invoices for the equipment and services which they wish to procure. These are then matched and
evaluated against the business plan submitted to the bank.
In some cases, the bank has made recommendations for amendments to the proposed purchases while
in others, the proposals have been approved immediately. Upon approval by the bank, the funding is
not released directly to the managers, but to the vendors whose quotations for the equipment and
services have been successful.
Observation
26
The approval process, due to its scrutiny, has worked well in most cases but has, in some cases, led to
delays in starting the business, something that had not been factored in the business plan.
3.5. The running of a Pasha Centre
The format of the Pasha Centres may vary from one location to another but the theme remains the
same. The focal point is the provision of computer-based Internet connectivity. Although ICTA has
provided guidelines on equipment, and technical specifications to the managers, there are variations
from one centre to another depending on individual managers’ business needs and preferences.
While some managers had purchased new equipment others went for a mixture of new and secondhand equipment. One thing that is common, though, is that only recognized computer brand names
have been purchased.
The number and type of equipment purchased depends on the individual
managers’ business needs based on the submitted business plan.
While the Pasha basic business model remains the same for all operators, the business approach varies
from one centre to another. For example, the very successful Pasha Centre in Nanyuki focuses more on
providing IT training services than on cyber and bureau services. This, too, is the case for Kamukunji
Pasha Centre in Nairobi. On the other hand, in most of the centres such as Nakuru, Malindi, Kisumu and
Narok, the business focus is on providing cyber and bureau services.
The marketing and awareness drives also vary from centre to centre. While many centres wait for
walk-in customers, others have clear marketing campaigns and plans in place. Some of the aggressive
business owners reach out to the local communities through the local administration - taking advantage
of the village chief’s barazas (these are informal meetings that are held regularly by local government
officials at the village level to create public awareness of government initiatives and other relevant
information such as disease breakouts, new security changes and so on).
Observations:

In most cases, the Pasha managers run the business themselves with the support of an assistant
or two who may have either the technical expertise or customer service skills required or both.
In other cases, the assistants and the manager may not have the technical skills and when
there is a problem, the business comes to a standstill until technical support is available.

In some centres, business is solely run on a day to day basis by the employed staff. In such
cases, it is evident that the Pasha managers run these centres as secondary businesses and
their main focus is elsewhere.
This is one factor that may have contributed to the poor
performance of some of the centres. This is another challenge that can only be reversed
through thorough vetting and frequent monitoring of the Pasha Centres.

There are also cases where the business owner lives in a different town and only visits the
business from time to time. During the information gathering sessions, it was observed that
27
some Pasha managers are full-time employees elsewhere and are, therefore, unable to give the
business their undivided attention. In the project review, it was recommended that the way
the centres are run and the different management styles will need to be given more attention
and close monitoring was recommended.

Many centres market their services using different strategies while others have no strategy at
all. The consequence of not putting in place effective marketing plans is reduced to pedestrian
traffic.
This arises from the centres not making their presence known or advertising the
comparative advantages that a Pasha Centre can provide. This, in turn, has the negative effect
of reduced sales revenue and consequently, the inability to break even or repay the loan.
3.6. The Range of Services Offered
The main focus of a Pasha Centre is the provision of access to online information and the ability to
reach the outside world through the Web. This is complemented by a bouquet of services that is only
limited by the business imagination of the Pasha manager and the local market requirements. Most
centres offer bureau services which include document scanning, printing, photocopying, binding and
lamination while others additionally offer typing and typesetting services at a fee.
To complement these basic services, some centres also offer a bouquet of services that include:

ICT Training – basic computer packages, ICDL;

Agency banking – banking services on behalf of financial institutions such as Kenya Commercial
Bank, Cooperative Bank and Equity Bank;

Agency services for bill payments for organizations and companies such as Nairobi Water and
Sewerage Services, Kenya Power, Zuku (TV and Internet), DSTV (Digital Satellite Television – a
continental service provider) and so on;

Mobile money transfer services for mobile phone companies - Safaricom, Airtel and Orange as
well financial institutions

Assisting clients with online registration for local and overseas examinations such as KCPE
(Kenya Certificate for Primary Education) and KCSE
(Kenya Certificate for Secondary
Education) and foreign ones such as TOEFL (Test of English as a Foreign Language);

Providing assistance with access to e-government services such as acquiring a PIN from the KRA
and access to online payslips for government employees;

Digital photography (still), video photography and editing; and,

More recently, during the last General Elections, voters used the centres to confirm that they
were registered as voters by the Independent Electoral and Boundaries Commission (IEBC).
3.7. Capacity Building and Training for Pasha Managers
The following training workshops have been held so far to equip Pasha operators with the skills to help
them to run their centres more effectively.
28

Prior to Round One, a nation-wide Digital Village training was held for 1060 participants from
2009 to 2010;

Pasha Training on the Franchise model-13-18 July 2014- Ruiru

Training on the Introduction to Franchising, Web portal, Entrepreneurial mindset was held for
The Youth Banner- Oct 2013 at AFRALTI;

Bandwidth Support training with ISPs, M&E with Deloitte held on 28-30 April, 2013;

An entrepreneurs’ workshop with SME CEOs held on 22-24 Oct, 2012;

Intel Easy Steps held on 5-7 March, 2012;

Round 2 Training was held in May, 2012;

Community Knowledge Centres - Master Trainers- with Cisco was held on 18-20 Jan, 2012 (a
few selected Pasha managers were part of this training); and,

Sustainability of Pasha Centres with Cisco and Appleseeds Inc. was held on Nov 2011.
29
4.0. Project Performance
4.1. Project Status So Far – Deloitte’s Project Monitoring & Evaluation
Deloitte, a locally-based international consulting firm, has been providing monitoring and evaluating
the performance of the Pasha project on a quarterly basis since 2012. They acknowledge that the
Pasha project has had its share of successes and challenges.
The initial plan envisaged a situation where all the 210 (now 290) constituencies in the country would
each have a Pasha Centre established.
However, this has not been realized due to a number of
challenges. At the moment, only 39 centres are operational.
Among the challenges faced by entrepreneurs are: A lack of business and entrepreneurial acumen in
some, low quality and high cost of the Internet bandwidth. Also mentioned was the lack of technical
support, suitable premises, marketing of the product, Pasha branding, non-uniform bouquet of services
and service delivery, and stiff market competition.
Other problems cited are poverty, low literacy levels, increased use of internet enabled mobile phones
and WiFi penetration, unreasonable licensing demands by local authorities and the rural-urban
migration by young potential Internet users so that only the older, less educated relatives are left in
villages.
The effect of all these challenges is low levels of business and the resultant high default rates in loan
repayments to Family Bank. For example, at the end of the financial year ending on June 30, 2014, half
of the KSh. 75,844,647 disbursed in Rounds One and Two, was considered to be at risk.
The Monitoring and Evaluation reports indicate that there has been a low uptake of services offered
and that if the objective of connecting all the constituencies through Pasha Centres is to be achieved,
a new approach will have to be introduced to bridge the current gaps.
Another worrying trend is the bank loan repayment default rate. About half of the loans advanced are
considered to be at risk as indicated below in section 5.1.1. This trend defeats the purpose of creating
a revolving fund that would finance new Pasha entrepreneurs.
These concerns have prompted the ICT Authority to re-evaluate the original project model and its
sustainability. As a result of this, no new Pasha Centres have been funded since the Round Two call for
proposals in November, 2011.
30
Pasha Project Financial Performance as at June, 2014
DIGITAL VILLAGE REVOLVING FUND
PERIOD: 9th May 2011 to 30th June 2014
Funds Summary
Ksh.
Funds Received from ICTA
108,495,790
Amount Approved for Disbursal by the Grants Committee in Phase I
47,889,147
Amount Approved for Disbursal by the Grants Committee in Phase II
27,955,500
Total Amount Approved for Disbursal by the Grants Committee
75,844,647
Loan Portfolio
Total Funds Disbursed as at 30th June 2014
53,035,091
Amount Recovered up to 30th June May 2014
40,978,728
Outstanding Loans as at 30th June 2014
41,892,093
Portfolio at Risk
Doubtful Debts
37,075,477
4.2. Project Success and Challenges
The ICTA perspective:
Despite various challenges, the Pasha project is meeting its objective of promoting digital inclusion in
the country. Even with only 39 operational centres, the ICT hubs are providing various ICT-focused
services in rural and marginalized areas. Additionally, they offer a number of other services depending
on local market requirements.
Some of the centres offer ICT training courses as the main revenue generator, deviating slightly from
the original Pasha model. Others offer bureau services as well as a bouquet of other services.
Encouragingly, a number of the businesses are breaking even which demonstrates that the Pasha
venture, with the right focus and entrepreneurial skills, can be profitable and self-sustaining.
Success stories of rural farmers accessing the Internet to get information on the weather, where to
market their agricultural produce and the prevailing market prices in different parts of the country,
have been reported. Other successes include students and the general populace using the centres not
only to access email, the social media, news and information but also to study, do research and get
entertained, especially through social media such as Facebook and YouTube.
31
The Pasha Association Perspective
This association was formed by Pasha managers in 2012, immediately after the disbursement of Round
One funding. The association’s objectives include:

Providing leadership to Pasha Managers;

Developing linkages with business partners and the government; and

Inculcating the best industry practices among Pasha Managers.
In order to achieve these aims, the association applied for and received official registration in the same
year, 2012, so that it could legally coordinate membership activities.
The governance of the association consists of a rather top-heavy structure with the following officials:
Patron, Chair-person, Assistant Chair-person, Secretary, Treasurer, Co-ordinator and four Committee
members.
Initially, the leadership was only composed of Round One managers. However, this has now changed.
The association took advantage of the training sessions, in July, 2014, held in Ruiru, to elect new
interim officials. The training, conducted by The Youth Banner, was on the proposed Franchise Model.
This time around, the leadership included both the Pasha Round One and Round Two managers. The
association reports that this has brought a lot of cohesion among its members.
The interim office seeks to:

Energise its members so that they can deliver quality service through prudent use of resources
and improved business practices.

Expose members and exchange ideas with successful Pasha Centres

Train members on emerging business trends.

Develop strategies to maximize profits and to make Pasha the recognised digital village model
that is charged with enhancing rural Internet connectivity

Develop tools for business growth
In the association’s opinion, the performance of the Pasha Centres has generally been below
expectation. They attribute this to the challenges they face. These include:

Lack of public awareness about the project as well as lack of coordination with local
authorities and other relevant ministries such as Ministry of Higher Education that accredits
Pasha Centres before they can be allowed to provide IT training;

Lack of Pasha branding and countrywide marketing;

Lack of or little feedback after the performance assessments by Deloitte;

They claim emphasis is on business skills yet the lack of current ICT skills among managers has
not been addressed; and.
32

Delay in the provision of resources. They cite the delay in providing the Internet bandwidth
support as a case in point.
The association attributes other challenges they face to Family Bank, the financial intermediary, which
they blame for being inflexible on late loan repayments, threatening to auction their assets and
reporting them to credit reference bureaus without listening to their side of the story. They also think
that the grace period of three months for business incubation, before one has to start repaying the
loans is too short.
The association’s recommendations for the project’s viability include:

Closer and regular engagement with the ICTA management to discuss their challenges;

The Pasha operators need to take advantage of opportunities and resources availed to them
and to upgrade their ICT skills regularly;

The criteria used to recruit Pasha managers be revised to include only those who run or have
run other ICT related business;

The grace period before loan repayment starts should be extended;

Continuous monitoring of business performance and feedback after each Deloitte evaluation be
given to individual managers;

Regular upgrading of ICT and business skills for managers;

Branding and marketing campaign to create awareness and involvement of the various
stakeholders such as local authorities, Ministry of Higher Education and so on; and

The need to clarify the role of the Youth Banner whose impact, they say, they have not felt.
The Pasha Manager’s Perspective
The consensus among Pasha managers is that the project would succeed if the challenges they
encounter were addressed. They believe that with the right government support, the centres can be a
hub of activities that the government can take advantage of to provide services in rural areas. They
believe this will not only create employment but will also, to a certain extent, stem the rural-urban
migration.
The managers gave the examples of the recently launched Huduma Centres program - the Kenya
government’s one-stop shops for accessing a variety of government services such as renewal of various
statutory licences and application for passports and other documents. They state that the services
offered at these centres, if handed over to the Pasha Centres would greatly increase customer traffic
and with the right pricing, generate enough revenue to sustain the Pasha project.
The Youth Banner Experience
33
To address the challenges faced by the Pasha managers, the ICT Authority, in July 2013, brought on
board, through competitive bidding, The Youth Banner (TYB), a not-for-profit organization whose focus
is development and the empowerment of the youth through entrepreneurship.
It also offers
consultancy in business development and business franchising. Its range of services includes business
plan development, coaching, mentorship, linkages to finance and markets, and peer-to-peer support.
The vision of The Youth Banner is to create “Developed and Economically Empowered Youth” while its
mission is: “To Create an Enabling Environment for the Youth to Earn Sustainable Incomes”.
The organization’s role in the Pasha project is to offer the consultancy services which also include the
evaluation of the current Pasha business model with the aim of:

Offering more support to the Pasha managers in their day-to-day operations in the accounting,
human resources, procurement, advertising, marketing and sales areas.

Developing a long term a plan that will contribute towards the sustainability of the Pasha
project.
Since TYB was contracted, it has, for example, held a Pasha training workshop where successful Kenyan
SME CEOs were invited to share their business experiences. The workshop covered among other topics:
an introduction to franchising, the Pasha web portal and how to develop an entrepreneurial mindset.
They have also held other training sessions including one on Training of Trainers (TOT) with the aim of
enhancing the internal capacity within the Pasha fraternity.
TYB has also conducted one-on-one mentoring sessions across the country with Pasha managers at their
respective business centres.
Besides this, they have developed an online portal to facilitate
communication between operators, to provide business development and marketing information, as
well as tools for online interaction.
In order to address some of the challenges experienced in implementing the Pasha project, TYB has
worked closely with the ICT Authority to come up with a new project framework that will ensure the
long-term sustainability of the project. Until the framework is ready, the recruitment of new Pasha
managers has been put on hold.
Looking forward, the organization’s vision is to support franchising so that new Pasha businesses
throughout the country will have the same business features and service delivery model.
The organization, however, recognizes that for the franchise model to succeed, there is a need to
focus on a mutual benefit approach, rather than on a one-way traffic that only favours the franchise
holder or the Pasha Centre manager as this would end up creating an entitlement (by franchise holder)
or dependency syndrome by the Pasha manager.
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The organization also notes that the current financing model requires a more critical look if its impact
is to be felt. This is because its current approach leaves a lot of room for misuse of the funding facility
notwithstanding their observation that the financial literacy of some of the current operators is
inadequate. Also, the attitude some of the managers towards the Pasha financial facility is that it is
government-backed and, therefore, the normal market rules and regulations should not strictly apply
to them. This mindset needs to be changed through regular interaction and capacity building.
Observation:
TYB has acknowledged that franchising is not for everyone.
From their observation, the Pasha
recruitment process for managers focused more on the presentation of a good business plan and much
less on the managers’ entrepreneurial qualities. The result is that each manager came into the project
with his or her own motivation, aspirations and goals.
It appears that what attracted many of them in the first place was the financing facility that came with
a low interest rate and fewer qualifying conditions than what is generally available in the open market
for businesses. This perception was made worse by the misplaced belief that the government was
going to hand over to them a business on a silver platter and would do everything to ensure the
businesses succeeded.
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5.0. Case Studies
5.1. A Success Story from the Foot of Mount Kenya
Ms. Rebecca Kariuki runs Laikipia East Pasha Centre in Nanyuki, a small town situated near Mount
Kenya. The town is inhabited mainly by a farming community. Many people who frequent Rebecca’s
Pasha Centre work on the large-scale farms that grow wheat. Rebecca’s success can be pinned on the
unique approach she used to establish a Pasha Centre.
When the second call for proposals was made, Rebecca was working in Nairobi for an ICT training
institution, in the position of Business Development Manager. However, she was a member of a ‘chama’
(round robin) in Laikipia where she also has relatives. She applied to be a Pasha manager in Nanyuki in
April 2012 and she learnt in July 2012 that her application had been accepted. Although she had
applied for a Ksh.1.7 m loan, she was given Ksh. 1.0 m because her business was a start-up. She got
quotations and invoices from suppliers and spent one month partitioning and renovating a first floor
rental facility.
She also installed an IT network to facilitate communication within the business. Her equipment,
comprising ten computers and a printer arrived in September 2012 and she immediately went on a
marketing campaign. She used Chiefs’ barazas, ‘chamas’, churches and even got an Imam from a local
mosque to create awareness about her business. To gain a competitive advantage, she decided to
charge for Internet access at a reduced rate of 50 cents per minute as opposed to the prevailing rate in
town of Ksh 2/- per minute. This made her business quite popular.
After two months, she realized that the business was not breaking even and that she had to change her
approach to the cyber café business. She bought a larger photo-copier and started doing printing for
businesses and schools. She, additionally, embarked on a door-to-door delivery campaign of the printed
jobs and photo-copies. Luckily, too, for her, the Kenya Institute of Management (KIM) had its training
school on the same premises and the students became her regular clients.
Her unique approach to marketing the centre has worked well for Rebecca and her business breaks
even. She is, therefore, able to service her loan facility. Her current business focus is ICT training in
which she offers basic computer applications package training as well as other courses such as A+,
CISCO, SPSS and Graphic Design. The business has trained over 400 students since January 2013 and is
having a positive impact in the community. Rebecca believes in the Pasha concept and is now looking
for bigger premises for expansion.
5.2. The Struggling Entrepreneur
Ematech Pasha Centre is in Masalani, a sleepy rural town in Ijara Constituency, a four-hour drive
journey south of Garissa town. To get to Masalani from Garissa one has to use a 4-wheel drive vehicle
36
along a dusty, bumpy road. A two-hour drive to east from the town, takes one to the border with
Somalia. Further down to the south and, again, two hours away is the Kenyan coastal town of Malindi.
The owner and manager of the centre is Mr. Elijah Mwaniki who has been in the IT business in the town
since 2005 doing typesetting, printing and photography. He learned about Pasha in 2010 and was among
the potential managers who were initially trained by the KICT Board. He later responded to the call for
proposals for funding and applied for Ksh.1.0 million to start a Pasha Centre. His proposal request, was
however, scaled down to Ksh.600,000.
With the money from the loan, he added to his existing business 5 desktop computers for the cyber
cafe and 3 printers - two of them colour and one black and white. The colour printers are used mainly
to produce digital photograph prints. He also used part of the money to renovate the premises so as to
improve its ambience. He also added one video camera and two still digital cameras besides installing
an IT network infrastructure. It took him six months to get the Pasha project up and running. But he
had to start repaying the loan after three months, something that put him under a lot of financial
stress. This forced him to look for money from other external sources to repay the loan.
With high expectations for the project, Mwaniki subscribed for 3G Internet access using a mobile phone
service modem. However, he could only get the 2G reception which was slow and often not reliable.
He ended up changing from one mobile service provider to another without much success. This
situation prevailed until August 2013 when with the ICTA bandwidth support, he entered into a
contract with SimbaNet, a satellite-based (VSAT) Internet service provider. Since then, the Internet
bandwidth and connectivity have been more reliable with only an occasional breakdown. With this
development, the customer traffic sharply increased but not enough for the business to break even.
Prior to the implementation of Kenya’s new constitution and the new administrative boundary changes,
the business was generating substantial revenue from government and NGO staff members who were
based in the town. This has now changed and the business traffic has drastically gone down because
the government administrative headquarters which used to be in Masalani moved to Garissa, 200km
away in line with the new changes in County governance.
In addition to this, fear of insecurity from Somalia militia has made the NGO personnel vacate the town
and move to Garissa. This has resulted in a 45% drop in the centre’s revenue. The consequence has
been late loan repayments and several requests to reschedule repayment. The majority of the current
customers are the local community and college students on vacation. They do not have the required
purchasing power nor are they particularly interested in using the Internet facilities. This reduced
revenue base has put a strain in the effective running of the Pasha Centre and its profitability.
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5.3. The Centre That May Close Down
Kapsabet, in Nandi County, borders the towns of Eldoret, Nandi Hills and Kakamega. At the time of our
visit, the town was fairly chilly with a little rain falling. While the neighbouring town of Nandi Hills is
surrounded by lush green tea plantations, Kapsabet’s main economic activities revolve around food
crop production and dairy farming.
On arrival, we make a quick phone call to our host at Kapsabet Pasha Centre. He tells us that we
cannot drive down to the centre since a neighbour had, earlier in the year, blocked the only motor
access to the business. We give him our location’s nearest landmark and he offers to come and collect
us.
We walk with him through a fenced compound in which cows graze as we walk down the slightly muddy
path leading to a small rumbling house. It is obvious to us that if it rains heavily, no customer is going
to wade down the slippery muddy path to go to the Kapsabet Pasha Centre! As we proceed, we start to
have misgivings as to whether this is a true Pasha Centre and if there is any activity going on inside.
Our doubts are soon confirmed as we enter the three-roomed building.
Our host is an employee while the Pasha manager is away on business. One begins to wonder whether
this centre makes any money, leave alone attracting a clientele with an aspiration to visit the cyberspace. He explains that he trains clients on basic computer packages. For Internet access, they use a
modem and a router. Connectivity is not reliable and the speeds are generally so slow that surfing the
web is not a pleasurable experience.
Besides, offering training and assistance to a potential cyber-café client, it becomes clear that our host
does not have any background information as to how the Pasha Centre started and its business journey
to date. We look around, ask a few questions and leave for our next destination. The owner and Pasha
manager could not keep our appointment as he was on some urgent business to attend to in Nairobi.
We call him, to tell him we have been to his centre but would want to catch up with him for an
interview in Nairobi on our return.
Back in Nairobi, we schedule an appointment at the ICTA offices with the Kapsabet Pasha manager, Mr.
David Tuikong, who narrates his Pasha experience. Up to the end of 2011, he was an ICT officer with
one of the professional examinations bodies. His responsibilities included maintenance and support of
the corporate ICT facilities as well as maintaining its website. On the side, he was also running his own
company, in Nairobi, offering training and software solutions as well as website design services to
companies.
In the first quarter of 2012, he was offered financing facility for the Pasha Project in Kapsabet. He
renovated the building and started operations in mid 2012 having secured a Ksh.600,000 loan from
Family Bank. After spending Ksh 100,000 on renovation, he bought 5 desktop computers, Internet
38
connectivity equipment, furniture and 2 LCD projectors for hiring out. He started by offering training
and business bureau facilities and has so far trained 50 clients. A few of the clients trained are young
but the majority are older – teachers, civil servants and so on.
David readily admits that the business is not as successful as he had envisioned. The location is not
conducive to the business as it is far removed from town activities and the target clientele. The
location also does not project a business image and there is no signage to show the activities going on
inside. At the moment the business is on family property so he does not pay for space. But he is
planning to find a more suitable location where he would have to pay rent.
The expected rent expense coupled with the cost of electricity, Internet access, the trainer’s salary
and other expenses, would make the business unsustainable in the long run unless he drastically
changes the business management style and make himself available because it is obvious that his
business needs his personal attention. Previously, his father used to be the manager when he started
the centre but passed away in 2013. So, effectively, there is a management vacuum. He has not
serviced his Ksh. 19,000/= monthly loan repayment for 3 months.
Given this scenario, this is a business that could close down any time. The manager is not readily
available as he splits his time between Nairobi and Kapsabet. He has not applied for bandwidth subsidy
but when he does, he says he will go for Wimax from Safaricom. During our visit, we did not see a
single customer. This is an example of how not to run a Pasha Centre.
To get the business back on track, the manager would have to make a decision on whether he wants to
run the business himself or to close it down altogether. If he decides to give it his full attention he
would have to:

Inject his own capital;

Find a more suitable business location;

Identify a bouquet of services that will address his customers’ needs;

Employ innovative and aggressive marketing strategies;

Carry out a survey and provide the relevant ICT training that the local clientele requires;

Apply for Wimax or satellite-based Internet bandwidth subsidy for more reliable connectivity
than the modem/router combination; and

Do a survey on the competition around his town and offer superior customer experience.
If the manager decides to go this route, he stands a chance of igniting his business on a firm
foundation. Otherwise, the centre will soon close down unless he, perpetually, subsidises it from his
own pocket!
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6.0. Lessons Learnt and Recommendations
6.1. Implementing Pasha: Learning the Hard Way
As with any start-up project, the Pasha initiative has faced a number of challenges during its
implementation. The first challenge was coming up with a working model that had not passed through
a pilot stage. The next was identifying suitable entrepreneurs with the right business acumen and
passion to ensure the project’s success.
The other challenge was the raising of the 10% equity required by Family Bank, the financing agency.
This knocked out a number of potential managers with the necessary business skills who could,
probably, have developed successful businesses.
Having secured the funding, some managers realized that their businesses were not well located – they
needed premises that could attract the required level of human traffic. This negatively affected the
number of customers that visited or patronized their centres. The other challenges have been the
reliability and the high cost of Internet access, the technical skills needed to operate the equipment
and to maintain Internet connectivity.
Most Pasha Centres have been struggling to keep their businesses afloat due to various other factors
such as poor record keeping, lack of business diversification (package of various services offered) and
the relevant marketing - branding and awareness creation among potential users of the ICT services.
Other challenges faced and which are outside the control of the managers include:

Stiff competition from private businesses;

Unreliable Internet connectivity and speeds particularly with mobile phone modems;

Poverty levels in the rural areas that limit spending on Pasha services in order to meet basic
needs;

Low literacy level among the communities leading to lack of appreciation for online resources;

Local authorities’ lack of awareness about the role of Pasha Centres – they often require
multiple licences to authorize a Pasha Centre to operate;

Widespread use of mobile phones to access the Internet and free WiFi (in some towns and
businesses) making visiting a cyber-cafe unnecessary unless downloading large files or printing
documents which is not often; and

Age profile – where the old, illiterate or semi-literate people are left in the village while the
agile and literate young people move to urban centres to eke a living.
6.2. Mitigating Against the Challenges: The New Pasha Framework
Pasha Centres are far from being established nationally in each of the 290 constituencies. Based on
Deloitte’s monitoring & evaluation reports and on its own experience, the ICT Authority has
40
determined that the project needs a modified operating and business framework. This will impose
greater business and financial discipline and increase uniformity of the Pasha brand.
The vision driving the new approach is to standardize business operations in all Pasha Centres across
the country with the aim of:

Enabling Pasha Centre managers to reduce the expense and time-consuming effort of starting a
Pasha Centre from scratch;

Improving, increasing and marketing the package and range of services currently provided by
Pasha Centres; and

Providing a long term sustainability framework for the centres.
Standardization includes taking into consideration customer and market needs throughout the
development of the range or bouquet of services for the centres. This includes site selection, training,
product knowledge and marketing. Standardization is expected to improve the quality of service in
Pasha Centres and to increase its acceptance in the marketplace leading to an increase in the
profitability of the centres
The advantages of introducing standards in the Pasha business model include:

Improvement of the Pasha corporate image and brand awareness; customers tend to be more
comfortable patronizing outlets they are familiar with or businesses with name recognition - a
name that is known to be credible;

Focus on the business: with an established business model in place the entrepreneur can focus
on running a successful business and not reinventing the wheel by experimenting;

Improving the chances of the sustainability of digital inclusion. By commercializing the
initiative, existing entrepreneurs in the ICT sector can invest in Pasha franchising as a way of
diversifying their offering or investing in a new business.
Setting and applying standards within Pasha Centres is meant to streamline internal and external
operations and to make business processes more consistent and reliable across the country. Benefits
can be gained through:

Eliminating wasteful investments of time and resources;

Increased internal productivity and quality of communication;

Reduced duplication of effort and improved risk management;

Standardization promotes profitability and sustainable growth;

Knowledge sharing and peer mentoring.
When applied effectively, standardization can be a true catalyst for business growth and strategic
development.
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The knock-on effect of this could result in improved service delivery, new users and more customers
whose business will to improve revenues and profitability.
Value proposition of the New Pasha Framework
Non-commercially, Pasha Centres are expected to play the role of a centre for social economic
empowerment through access to information.
Piloting the New Pasha Framework
Currently, Pasha Centres do not have standardized operations or sufficient services to create adequate
traffic to generate sustainable income. The new Pasha Framework proposes the standardization of
business operations across Pasha Centres with the aim of:

Helping to increase the business success rate and acceptability of Pasha services;

Introducing a Franchisor - a company or organization – that will have the right to negotiate for
licences, goods and services with those applying for franchises and to ensure that all facilities
and services are standardized through continuous training and monitoring.
Scope of the Pilot

Develop a licensing model of operating procedures under which a Pasha Centre will be a
branded outlet with suitably qualified staff and run in accordance with set rules and
procedures;

Ensure that Pasha Centres fulfil their mandate of providing customers with access to
information by bringing ICT services closer to rural communities;

Ensure that Pasha Centre managers and staff are committed to maintaining a high level of
professionalism and the highest possible standards of products and services.
The pilot will be carried out in ten (10) sites and will address how the model will support business
development goals and assist in determining how it will ultimately be delivered to Pasha Managers with
the least amount of flaws. It is expected to have the following benefits:

Introduce the Franchisor Model from the onset to negotiate for goods and services on behalf of
Pasha Centres. Short term benefit: Reduced cost of purchase due to economies of scale and the
standardized bouquet of services

Enabling Pasha Managers to reduce the expenses and time-consuming process of starting a
Pasha Centre from scratch through the offering of the “Business in a Box” concept associated
with franchising.
42
6.3. Viability of Other Government Financing Options
The World Bank extended to the Government of Kenya (GoK) a US $ 4million loan to provide seed
money for the Pasha project. The objective was that the funds loaned to Pasha managers, when
repaid, would become a revolving fund that would finance new Pasha ventures. However, with the
current high loan default rate, this remains a distant dream. Many Pasha managers have raised the
question of alternative sources of financing since they feel the current arrangement is too rigid. They
have proposed that ICTA considers other government-supported funding.
A quick look at the Kenyan market, however, reveals that this may not necessarily be practical. The
current Pasha loan at an interest rate of 10% per annum is one of the lowest in the market. The three
other government-backed financing sources which could be considered are: the Women Enterprise Fund
(WEF), the Youth Enterprise Development Fund (YEDF) and the Uwezo Fund.
Each of the funds mentioned above have their own lending restrictions. The WEF exclusively targets
women entrepreneurs while the other two funds, Uwezo and YEDF focus on the youth aged 35 years
and below. Furthermore, in the case of Uwezo, any funding of up to Ksh 500,000 is given to youth
groups and not to individuals. These restrictions essentially make only a section of would be Pasha
managers eligible and the amount of funding may not necessarily provide adequate capital.
The other financing alternative that has been suggested before is that established telecommunication
companies (Safaricom, Airtel and Orange, etc.) pay a 1% levy of their revenues into a Universal Service
Fund which in turn would finance future Pasha entrepreneurs. This requires government commitment
to make it work and MoIC would have to lobby the relevant stakeholders for support.
6.4. Recommendations
The Pasha project has been partially successful in fulfilling its mandate and objectives. In order to
move the project forward, a revised approach is needed and the following recommendations have been
proposed by various stakeholders:

The recruitment of Pasha managers to be reviewed to include face to face interviews and an
inspection of the proposed business site before a candidate is declared successful

The New Pasha Framework to be introduced and services, and quality of service, procedures
and facilities standardized.

The franchise model be urgently considered

Negotiation with Ministry of Devolution & Planning to allow Huduma Centre services be carried
out in Pasha Centres after the branding and standardization of services

Review of the grace period between financing and loan recovery to at least 6 months to allow
the business to settle down
43

Consider lobbying the government for the implementation of the Universal Service Fund so that
1% of revenues the major telecommunication companies is used to finance the Digital Inclusion
project and hence the Pasha business

Launch an aggressive marketing campaign supported by branding and awareness creation of the
Pasha Centres as a government project as well as sensitizing the local authorities and the
general public on the project.

Developing a standard curriculum that is recognized by the Ministry of Higher Education for the
Pasha Centres involved in providing training services

Closer monitoring of individual Pasha Centres

Continuous training of the managers and imparting of new business ideas.

Consider extending the bandwidth support program
44